For those pondering HR opportunities down under, there are some significant differences in legislation to be aware of, says Gemma Tumelty
As the UK looks set to leave the EU, businesses from these shores are likely to start looking further afield for additional trading opportunities. Australia has already been publicly earmarked as a key trading partner of the future. It makes sense, given our shared language, culture and monarchy, and a free trade agreement between our two nations has already been mooted.
We recently announced our expansion into Australia, setting up a partnership with a master franchisee to establish our brand there. As an outsourced HR business providing support to SMEs, we recognised a significant market for our model in the country, and conducted extensive research prior to the agreement being made, which we hope may help other companies looking to set up offices in Australia – either now, or in the coming months and years.
As well as speaking the same language – which helps – Australian human resources legislation is largely based on UK employment law. However, there are some significant differences which any business looking to establish themselves ‘Down Under’ should be aware of. The main ones are around wages, holiday, pensions and workers’ compensation.
Small businesses in Australia also have different obligations to workers. Employees of smaller businesses have different, and fewer, rights than in the UK where they are linked solely to the employee, not the size of business. For example, with redundancy and unfair dismissal, employees in small firms have fewer rights than those in larger companies. If doing business in Australia you should therefore consider the size of the company you are setting up, or working with.
Wages
Whereas in the UK we have very basic standards on wages – simply the national minimum wage and the national living wage – in Australia there is the more complicated pay awards system, which sets rates for different industries.
There are literally hundreds of pay awards and it would be impossible for employers to comprehend them all, so HR or legal support is needed so that businesses do not fall foul of the law or the Fair Work Ombudsman (FWO). There are increasingly high-profile cases of FWO interventions on pay so the risk of getting it wrong is huge. Australia also has Enterprise Bargaining Agreements (EBAs), which can be collective or individual.
The minimum wage is also much higher in Australia – from April this year it’s the equivalent of £11 per hour (compared to £7.50 in the UK) – but it’s worth bearing in mind that the cost of living is much higher, too, and wages are generally higher across the board.
Holiday
A full-time worker in the UK is entitled to 20 days of statutory holiday pay and a further eight bank holidays. These usually have to be taken during the holiday year, but where companies give a more generous allowance the extra days may, with agreement, be carried forward. Holiday accrues from day one and new case law means holiday pay includes overtime and commission.
Australian annual leave entitlements are drawn down from the National Employment Standards (NES) which mean that both full- and part-time employees have four weeks’ annual leave as a baseline, building up from the first day of work and carried over to the next year if untaken. A typical allowance for sick leave, known as sick and carer’s leave or personal leave, is 10 days, with one or two days for compassionate leave. However, it will never be paid out when leaving the company unless it forms part of a benefit the company may want to offer over and above the legislative requirement.
Each state in Australia has its own rules on long service leave (LSL), which is paid out to full-time or casual workers after 10 years as an incentive to stay long-term with a company. It accrues at a rate of one week for every 60 weeks of employment with a single employer.
Pensions
In Australia there is a pension scheme called superannuation, which means employers have to pay contributions of 9.5 per cent of an employee’s ordinary time earnings. By contrast the UK’s auto-enrolment scheme kicks in at a much higher level of earning (£10,000 per annum for those over the age of 22) and is only a two per cent employer contribution. UK employers are just getting used to auto enrolment but superannuation is a very mature scheme and complex to administer.
Workers’ compensation
Workers' compensation is a compulsory statutory form of insurance for all employers in every state and territory in Australia and provides protection to workers if they suffer a work-related injury or disease. Workers’ compensation includes payments to employees to cover their wages whilst they cannot work and medical expenses and rehabilitation. No such scheme exists in the UK.
Gemma Tumelty is managing director at The HR Dept